CAS Covered Contracts: Definition and Guide

Índice
  1. What are CAS covered contracts?
  2. Compliance requirements for CAS covered contracts
  3. Determining CAS covered contracts
  4. Contract price or cost adjustments for noncompliance
  5. Determining noncompliance and resolving cost impacts
  6. Types of CAS covered contracts
  7. Calculating the cost impact for CAS covered contracts
  8. Components of the cost impact calculation
  9. Calculating interest on increased costs
  10. Determining the impact on incentives, fees, and profits
  11. Combining cost impacts for all affected contracts
  12. Contractor's responsibility for cost accounting practice changes
  13. Submitting a General Dollar Magnitude (GDM) proposal
  14. Submitting a Detailed Cost-Impact (DCI) proposal
  15. Evaluating and resolving the cost impact
  16. Calculating the increased cost to the Government
  17. Remedies for noncompliance or failure to submit proposals

What are CAS covered contracts?

CAS covered contracts are contracts that are subject to the Cost Accounting Standards (CAS) regulations. These regulations are designed to ensure that contractors' cost accounting practices are consistent and equitable when dealing with the government. CAS covered contracts require compliance with specific cost accounting practices to ensure that the government is receiving fair and reasonable prices for goods and services.

Compliance requirements for CAS covered contracts

Compliance with CAS regulations is mandatory for contractors who have CAS covered contracts. These regulations outline the accounting practices that contractors must follow when estimating, accumulating, and reporting costs on CAS covered contracts. Compliance with CAS regulations helps to ensure that the government is receiving accurate and reliable cost information from contractors.

Determining CAS covered contracts

The determination of whether a contract is a CAS covered contract is made by the Contracting Officer. The Contracting Officer will review the terms and conditions of the contract to determine if it meets the criteria for CAS coverage. If the contract meets the criteria, it will be designated as a CAS covered contract and the contractor will be required to comply with CAS regulations.

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Contract price or cost adjustments for noncompliance

If a contractor fails to comply with CAS regulations on a CAS covered contract, there may be contract price or cost adjustments. These adjustments are made to ensure that the government is not paying more than it should for goods and services. The adjustments may include increases or decreases in contract prices or cost accumulations, depending on the nature of the noncompliance.

Determining noncompliance and resolving cost impacts

The determination of noncompliance and the resolution of cost impacts are conducted by the Contracting Officer. The Contracting Officer will review the contractor's cost accounting practices and determine if there are any instances of noncompliance. If noncompliance is found, the Contracting Officer will calculate the cost impact and work with the contractor to resolve the issue.

Types of CAS covered contracts

CAS covered contracts can take different forms, including fixed-price contracts and subcontracts or flexibly-priced contracts and subcontracts. Fixed-price contracts have a set price that is agreed upon at the beginning of the contract, while flexibly-priced contracts allow for adjustments to the price based on changes in the contractor's costs.

Calculating the cost impact for CAS covered contracts

The cost impact calculation for CAS covered contracts is a complex process that takes into account various factors. The calculation compares the compliant and noncompliant cost accounting practices to determine the difference in contract and subcontract prices and cost accumulations.

Components of the cost impact calculation

The cost impact calculation includes several components. It considers the increase or decrease in contract and subcontract prices and cost accumulations as a result of noncompliance. It also takes into account the calculation of interest on increased costs paid as a result of noncompliance.

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Calculating interest on increased costs

When there is noncompliance on a CAS covered contract, the contractor may be required to pay interest on the increased costs incurred by the government as a result of the noncompliance. The calculation of interest is based on the time period during which the increased costs were incurred and the applicable interest rate.

Determining the impact on incentives, fees, and profits

The cost impact calculation also includes the determination of the total increase or decrease in contract and subcontract incentives, fees, and profits. This ensures that the contractor is not benefiting financially from the noncompliance.

Combining cost impacts for all affected contracts

If a contractor has multiple CAS covered contracts that are affected by noncompliance, the cost impacts for all of these contracts are combined. This allows for a comprehensive assessment of the overall impact of the noncompliance on the contractor's business and the government's costs.

Contractor's responsibility for cost accounting practice changes

If a contractor is found to be noncompliant with CAS regulations, it is the contractor's responsibility to make the necessary changes to their cost accounting practices. The contractor must submit a description of the cost accounting practice change needed to correct the noncompliance.

Submitting a General Dollar Magnitude (GDM) proposal

To resolve the cost impact of noncompliance, the contractor may be required to submit a proposal. One type of proposal is the General Dollar Magnitude (GDM) proposal. The GDM proposal calculates the cost impact and may use various methods to determine the increase or decrease in contract and subcontract prices and cost accumulations.

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Submitting a Detailed Cost-Impact (DCI) proposal

Another type of proposal that the contractor may be required to submit is the Detailed Cost-Impact (DCI) proposal. The DCI proposal provides detailed information on the increase or decrease in price and cost accumulations for each affected CAS covered contract and subcontract. This allows for a more precise calculation of the cost impact.

Evaluating and resolving the cost impact

Once the contractor has submitted the GDM proposal or DCI proposal, the Contracting Officer will evaluate the proposal and negotiate and resolve the cost impact with the contractor. This process ensures that the cost impact is fair and reasonable for both parties.

Calculating the increased cost to the Government

The cost impact calculation includes the calculation of the increased cost to the Government in the aggregate. This calculation takes into account all of the affected CAS covered contracts and subcontracts and determines the total amount of increased costs incurred by the Government as a result of the noncompliance.

Remedies for noncompliance or failure to submit proposals

If a contractor fails to correct the noncompliance or submit the required proposal within the specified time, there may be remedies applied. These remedies can include withholding payments, disallowing costs, or even termination of the contract. It is important for contractors to take compliance with CAS regulations seriously to avoid these potential consequences.

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